American Fights History as It Fends Off Merger

CHARLOTTE, N.C. (TheStreet) -- It's not his fault, but AMR (AAMRQ.PK) CEO Tom Horton is fighting history now, trying to turn back the tide of consolidation that began to sweep over the airline industry four decades ago.

Since airline deregulation in 1980, 150 carriers -- starting with Pan American World Airways, once the greatest airline in the world -- have disappeared, many swallowed up by consolidation. By the 1990s, it had become clear that the U.S. would one day be home to three surviving legacy carriers with vast global networks.

Of the three, American is the one that has been least able to master consolidation. Rather, it seems to have managed to incur all of the negative impacts -- principally overpaying for deals that turned out to have no value, and incurring labor's wrath -- while deriving none of the benefits.

Partially as a result, while Delta (DAL) and United (UAL) made major acquisitions in 2008 and 2010, American sat tight.

Now it is battling a takeover bid by US Airways (LCC) , a smaller carrier that is a product of many mergers.

Those mergers haven't all been pretty. The 1989 combination of Piedmont and USAir has long been cited as a model of how not to do a merger. As Jerry Orr, aviation director at Charlotte Douglas International Airport, said, "When you buy somebody, you ought to save the good parts and throw away the bad parts, but USAir did the opposite," he said. The feeling was that Pittsburgh-centric USAir wanted to expunge the Piedmont culture.

When Steven Wolf became CEO of USAir in 1996, one of the first things he did was to change the name, partially in an effort to unite a divided work force.